Tony Blair will today spearhead a fresh government initiative to persuade voters they have nothing to fear from consenting to a relaxation of "over-zealous" rules which stop Whitehall departments sharing information about individual citizens.

But the exercise was denounced by opposition MPs as a further lurch towards a Big Brother state even before the prime minister announces the formation of five citizen panels, each with 100 members, to examine the merits of such a change.

Officials were keen to emphasise that talk of a "single massive database" is misconceived. What is at issue is allowing individual departmental systems to talk to each other.

One official derided the condemnation likely to come from civil liberty lobbies, insisting: "At present we have some ridiculously artificial demarcations in government when Tesco and the credit agencies know more about us all than government agencies which are there to help you."

The first target of the reforms is bereavement, when families under stress are required to notify a range of agencies that they have lost a loved one.

Work is still under way to establish the technical changes that would be necessary to make reporting a death a one-stop call. It is claimed such changes would help "early identification" and thus give warning that a family is struggling.

But the Tories and Liberal Democrats have brushed aside promised safeguards and denounce the change as "an excuse for bureaucrats to snoop". The NO2ID campaign to resist government plans for universal ID cards calls the proposals "the abolition of privacy".

It reverses the historic presumption of confidentiality, the campaign argues, something ministers deny. But the office of the information commissioner, whose task is to promote public access to official data - and to protect personal data - is taking a more benign view. The government's intentions have been debated within Whitehall and were signalled as part of the reform of public service delivery in the documents published as part of Gordon Brown's pre-budget report in November. "Citizens should be able to access public services in relation to changes in their personal or family life events through a single point," said a document which promised a delivery plan in 2007.

Inside Whitehall the lead department on the proposed change is work and pensions, whose secretary of state, John Hutton, yesterday used an interview on BBC1's Politics Show to deny that the change were too intrusive. The potential benefits were considerable, he said. "The government already stores vast amounts of data about individual citizens but actually doesn't share it terribly intelligently across various government agencies. I had a case in my department about a family where someone had unfortunately died in a road traffic accident, and over the space of six months, on 44 separate occasions, they were asked by elements of my department to confirm details of this terrible tragedy."

This did not impress critics, who pointed to a range of costly IT projects which had not protected individual privacy or delivered the benefits promised. The Lib Dem leader, Sir Menzies Campbell, said: "Blair's Britain now has the most intrusive government in our history. There is no part of people's lives which is free from snooping."

Shami Chakrabarti, from the human rights group Liberty, said: "This is an accumulation of our government's contempt for our privacy. This half-baked proposal would allow an information free-for-all within government - ripe for disastrous errors and ripe for corruption and fraud."

The shadow home secretary, David Davis, was sharply critical of Whitehall's record of managing databases. The money could much better be spent on policing or border controls, he said.

FAQ Databases

The government wants to hold more information about everyone. Doesn't it have enough already?

It does have a lot, though ministers argue that commercial companies such as supermarkets and credit agencies have a lot more. Ministers want to remove historic restrictions on data sharing, saving voters duplicated effort.

What about Whitehall's record in creating big software systems to handle information?

This isn't the "super-database" which some media reports describe. It's seeking public support to allow existing systems to exchange data.

Is this a done deal ?

No. The government is twitchy about Big Brother allegations. Today marks the start of a soft sell.